Correlation Between Novita SA and CD PROJEKT

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Can any of the company-specific risk be diversified away by investing in both Novita SA and CD PROJEKT at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Novita SA and CD PROJEKT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novita SA and CD PROJEKT SA, you can compare the effects of market volatilities on Novita SA and CD PROJEKT and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Novita SA with a short position of CD PROJEKT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novita SA and CD PROJEKT.

Diversification Opportunities for Novita SA and CD PROJEKT

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Novita and CDR is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Novita SA and CD PROJEKT SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD PROJEKT SA and Novita SA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Novita SA are associated (or correlated) with CD PROJEKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD PROJEKT SA has no effect on the direction of Novita SA i.e., Novita SA and CD PROJEKT go up and down completely randomly.

Pair Corralation between Novita SA and CD PROJEKT

Assuming the 90 days trading horizon Novita SA is expected to generate 0.67 times more return on investment than CD PROJEKT. However, Novita SA is 1.49 times less risky than CD PROJEKT. It trades about 0.28 of its potential returns per unit of risk. CD PROJEKT SA is currently generating about 0.04 per unit of risk. If you would invest  11,100  in Novita SA on August 30, 2024 and sell it today you would earn a total of  950.00  from holding Novita SA or generate 8.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Novita SA  vs.  CD PROJEKT SA

 Performance 
       Timeline  
Novita SA 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Novita SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Novita SA may actually be approaching a critical reversion point that can send shares even higher in December 2024.
CD PROJEKT SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CD PROJEKT SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Novita SA and CD PROJEKT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Novita SA and CD PROJEKT

The main advantage of trading using opposite Novita SA and CD PROJEKT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novita SA position performs unexpectedly, CD PROJEKT can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CD PROJEKT will offset losses from the drop in CD PROJEKT's long position.
The idea behind Novita SA and CD PROJEKT SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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